SRF Q2 revenue rises 35%, chemicals remain weak

SRF Ltd (

) reported 35% YoY revenue growth to ₹4,904 crore in Q2FY27. The key concern remains specialty chemicals, where recovery is taking longer than expected despite management maintaining its growth guidance. SRF’s Q2 performance was mixed. Revenue growth was supported by fluorochemicals, while the films & foil and technical textiles businesses delivered strong growth. Films & foil revenue rose 51% YoY, while technical textiles grew 25% YoY. However, EBITDA of ₹945 crore missed Street expectations and margins fell to around 21%. What matters is not the revenue growth but the quality of that growth. In the chemicals segment, operating EBIT grew only 10%, much slower than revenue. Pricing pressure in specialty chemicals, Chinese oversupply and higher input costs continue to weigh on profitability. This explains why investors remain cautious even as management expects the chemicals business to deliver revenue growth at the higher end of its 15-20% guidance range for FY27. SRF's non-chemical businesses are currently helping offset weakness in specialty chemicals. Films & foil margins improved on record production and value-added products, while technical textiles benefited from export demand and new customer additions. These segments are supporting earnings, but specialty chemicals remains the largest variable for valuation and future profit growth. The company has also approved a ₹600 crore aluminium foil investment aimed at battery and advanced packaging applications. What to watch next is whether specialty chemicals sees a meaningful recovery in volumes and realizations during H2FY27. A pickup in agrochemicals and pharmaceutical intermediates could improve sentiment, but margin recovery remains the key monitor. View: Earnings recovery depends mainly on specialty chemicals. Until margins improve meaningfully, investor confidence is likely to remain tied to execution in that business.